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Health-care legislation's economic/business winners and losers

My colleague Chris Cillizza over at The Fix has done a good job listing the political winners and losers from last night's House passage of the new health-care legislation, which you can see by clicking here.

Let's take a look at the economic and business-sector winners and losers.

WINNERS:

  • The health insurance companies: It's pretty funny that President Obama spent much of the debate over health-care legislation beating up on health insurance companies and is now poised to sign a bill that drops a big Christmas present on their doorstep. If there are 30 million Americans without health insurance, and the new bill says they're going to get health insurance, where will they get that health insurance? That's right -- health insurance companies.

  • The stock markets (so far): Wall Street has shrugged off the anticipated hangover of health-care legislation to stage a mild rally today. Some worried that the markets would dive because of a new and massive government intervention into the private sector, which the health-care legislation represents. But markets appear to be treating this legislation as the basest possible news: a shift of money into the health-care sector. The markets evidently don't care, at least initially, that the new money flowing into the health-care sector comes from taxpayers or business-paid fines. They just care that 30 million new customers into the insurance and health-care systems could mean more revenue for those businesses.

    "That means more sales for Pfizer Inc., the world’s largest drugmaker; UnitedHealth Group Inc., the largest health insurer; and a cluster of companies led by Amerigroup Corp. that specialize in managing services through Medicaid, a program that will grow in the remake," BusinessWeek writes.

  • Hospitals: “The deal is basically being made to reduce the cuts they would get from the federal government with corresponding increases they’d get from [greater] coverage,” says Jason DeSena Trennert, managing partner at Strategas Research Partners, quoted here on SmartMoney. It's like this: Everyone has to go to the hospital, even people without insurance. When they get treated, hospitals don't make money. When they get insurance and get treated, hospitals make money. But here's a potential downside for hospitals: Under the new legislation, Medicare reimbursement will be trimmed.

  • Big Pharma: Again, more insured people will buy more drugs, making pharmaceutical companies' profits grow and their stock go up. Perhaps the added money into the system will spur innovation at smaller pharma companies.

    LOSERS:

  • The interstate health insurance market: Conservatives want people to be able to shop for health insurance the same way they shop for other kinds of insurance. One way to do this is to allow people to shop for health insurance across state lines, seeking the lowest price for the package they want. In the new health-care legislation, people will be able to shop for insurance, but only from exchanges in their own states.

  • Employer-based health insurance (maybe): The U.S. is the only industrialized nation I know of that so closely links health insurance to employment. This system, put in place in the middle of the last century, helps anchor people to their jobs and, effectively, their geography -- a liability in today's more highly mobile workforce. In the long view, this is probably a good thing, but in the short term, it could create instability in the workforce as the de-linking inevitably happens.

  • Managed health care: “Within the health insurance group ... the Medicare advantage plans are the biggest losers within managed care,” Ipsita Smolinski, president and health-care analyst at Capitol Street, told CNBC.

  • Medical device makers: Someone has to pay for the health-care legislation, which will cost at least $1 trillion, and part of the burden will be borne by makers of medical devices, which will have to pay a 2.3 percent excise tax on some devices beginning in 2013, BusinessWeek reports.

    What are some of the other winners and losers that I've forgotten to include? Let me know via the comments below.

    Follow me on Twitter at @theticker.

  • By Frank Ahrens  |  March 22, 2010; 2:08 PM ET
    Categories:  Congress , Corporations , The Ticker  | Tags: Obama, Obamacare, healthcare reform, insurance companies, pharma  
    Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Stocks erase losses in mid-day trading
    Next: N.Y. police confirm Fed's findings on 'runaway' Prius: Driver error

    Comments

    Well, Frank, you certainly addressed the symptons: health industry stocks up as a result of the House vote.
    Maybe, someday, someone will get around to reporting on the causes: the Big Pharma and insurer deals. To say nothing of the proponent providers getting their share of the cut.
    All at the taxpayers' expense.

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